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Ministry for Foreign Affairs

Address on Foreign Affairs by Valgerður Sverrisdóttir, Minister for Foreign Affairs



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Madame Speaker,

It is an old adage that the foreign policy of any nation is shaped to a large extent by its geographical location and immediate neighboorhood. Iceland is no exception. Iceland’s geographical position in the middle of the North Atlantic has determined the nation’s struggle for survival. It is on our geographical location that we base our rights to the rich fishing grounds surrounding the country. The weather system and oceanic currents are the source of reliable precipitation that has secured the power generation of our hydroelectric power plants. The volcanic activity of the North Atlantic ridge has enabled us to heat our homes and produce electricity using geothermal power plants.

The country’s global position is therefore in many ways the foundation of the economic prosperity currently enjoyed by Iceland. It is also the reason for the emphasis that Iceland has placed on the aspects of foreign policy relating to the law of the sea, utilisation of marine resources, environmental protection, communications and trade, in addition to development affairs, where co-operation with other states on fisheries and power development has been prominent.

But very probably the effect of our global position is nowhere more clear than in matters of security and defence. The country’s position “at the ends of the oceans” has, more than anything else, shaped Iceland’s policy in that regard. For centuries distance was our principal defence. World War II, the British occupation and the Battle of the Atlantic then brought home to us the knowledge that distance no longer provided reliable protection.

Our external environment has changed profoundly in recent years. The peaceful prospects in relations between the countries of Northern hemisphere form the backdrop to the decision of the United States to reduce their defence capability in Iceland. But the changes are apparent not only in relations between individual states. Indications have emerged of continued climate change in the Arctic Region which in time could have a significant impact on both ocean currents and the natural environment, and thereby Iceland's use of its natural resources.

None of these changes will disrupt the key position that Iceland’s geographical position gives the country in international relations. On the contrary, the country's resources, including its human resources, will continue to provide the foundation for the welfare of the Icelandic nation. By utilising our resources on sea and on land in a responsible and prudent manner we can also set an example for other countries and lead the way in the important work ahead of eradicating hunger and extreme poverty.

Even though the clouds of conflict have dispersed Iceland finds itself even more in the main thoroughfare of international commuinications. This applies not only to the increased frequency of passenger flights, which facilitate the activities of Icelandic businessmen on both sides of the Atlantic. It is also foreseeable that new shipping lanes will open to the North with the warming climate. Iceland’s emgering position as the outpost at the entrance to the Arctic Region may affect its position in the security affairs of the region. I think it is therefore time – and in fact essential – for the Icelandic government to pay greater attention to the nation’s immediate environment – the Arctic – in the formulation of its foreign policy in the coming years. With this in view, the Foreign Ministry has organised an international conference in Akureyri next March on the impact of opening new shipping lanes in the North.

Madame Speaker,

The agreement between Iceland and the United States, which the Prime Minister and I signed last October in Washington, marks the beginning of a new chapter in the defence co-operation between the two nations. The agreement states unequivocally that the United States will honour its commitments under the Defense Agreement of 1951, and that Iceland’s defences will be secured by strong and mobile defence capability and troops.

However, there are various matters that need to be addressed following the departure of the defence force. One of these matters is the use of the base area itself, which may be said to involve three separate issues. The international airport requires certain installations for its operations, and that issue has been resolved. In addition, a state-owned company has been formed, the Keflavik Airport Development Company ehf., which will address the task of developing and disposing of other parts of the base area with the objective of putting as much of it as possible to productive use. Finally, a security area has been designated in the area of the airport which will be useful for the country’s defences, for domestic and international exercises, and for use by Iceland's NATO allies.

NATO has defined patrolling of the Allies’ airspace as a fundamental aspect of the Alliance's defences, and important discussions lie ahead with the United States and NATO concerning the future operation and arrangements of the Icelandic Air Defence System, which has been financed until now by the United States through their operation of the Radar Agency. The Icelandic Air Defence System consists of numerous components, of which the principal ones are air defence radar, secure communications systems and capabilities for air defence operational command.

It is clear that we cannot attend to all aspects of air defence without the support of our allies. For this reason, the discussions with the United States and NATO are important. We have noted interest among our allies in the arrangements for our air defence in the future and for the security area at Keflavik Airport. These factors are also a prerequisite for conducting NATO exercises relating to Iceland’s defences and the common defences of NATO.

Madame Speaker,

The agreement between Iceland and the United States concerning the continuation of the defence co-operation forms a firm framework for Iceland’s defence and security. However, it is patently clear that the current situation calls for increased initiative on our part in ensuring our own security. It will be necessary to increase our consultations and co-operation with the nations that share our interests in the northern Atlantic. Although the United States is most prominent in this regard, Canada and not least the United Kingdom and the Nordic Countries should also be mentioned. Also, increased demands will be made for Icelandic contributions to NATO, in particular NATO missions. If we contribute our fair share to the activities and missions of NATO our voice will also have greater resonance. In this regard, the Icelandic Crisis Response Unit will play a key role. I have already ordered a study of the means by which we could increase our contribution to the Allied mission in Afghanistan. To give an example, NATO has issued a call for experts in the fields of health, law enforcement and judicial matters. Relations and consultations with the military authorities and commands of NATO need to be strengthened. This applies in particular to the US European Command in Stuttgart, Germany. Iceland’s permanent mission at NATO will be reinforced in order to cope with the increased work which will result.

But we must also look for more extensive co-operation on security and defence. I mentioned earlier the need to monitor closely the current trends within the European Union. The enlargement of the European Union, no less than the enlargement of NATO, entrenches stability and reduces the risk of conflict and war on the continent and its immediate vicinity. The entry of Bulgaria and Rumania into the European Union will mean that the composition of NATO and the EU to a large extent coincide. The special position of NATO, however, remains the presence of the United States and Canada at the table. The trends in international affairs are calling for closer co-operation between NATO and the EU, and this co-operation has been in preparation for some time. Our interests lie primarily in the continued role of NATO at the core of the security and defence of the region. But we must at the same time examine ways to reinforce our security and defence co-operation with the European Union – as it is clear that the European Union aspires to a more prominent role in this regard. Our nearness to Europe also makes the European Union a logical partner in our struggle against many of the threats which may confront us in the future – including terrorism and international crime, such as trafficking in drugs and human beings.


Madame Speaker,

In our discussion of security and defence it is reasonable to look first at our immediate neighbourhood. Even though all is quiet for the time being, this is no guarantee of security in this age of globalisation. These days Icelandic business interests are stretching across the entire world. In the same way our security interests will be best assured in a world characterised by peace, security and stability. But even more importantly, Icelanders, like other nations, have responsibilities in this regard. Next Sunday, 19 November, will mark the sixtieth anniversary of Iceland's membership of the United Nations. As laid down in Article 1 of the United Nations Charter, its principal object is to maintain international peace and security. Through our membership of the United Nations, we Icelanders undertook the obligation to do our share to achieve this end. We are bound by duty to discharge this obligation to the extent that we can, and in this regard we have much to offer. It is no use protesting that we are small and distant from the principal areas of conflict in the world.

It came as a surprise to many people that the Nobel Peace Prize for 2006 should be awarded to the Grameen Bank in Bangladesh and to its founder, Muhammad Yunus, professor of economics. It is unusual to see banking activities coupled with the struggle for peace and security. But the Grameen Bank is no ordinary bank, and Professor Yunus is no ordinary man. In 1974 he began personally to grant small loans to a small number of poor women in Bangladesh. The aim was to enable women to break free from the shackles of poverty and make a better life for themselves and their families. Today, almost seven million customers are benefiting from the bank’s services, almost all of them women. It is safe to say that in this instance the Norwegian Nobel Committee was spot on. The struggle for economic and social progress is not only a struggle against poverty, but a struggle for peace and security. This is consistent with the policy of the Icelandic government which was clearly described in Iceland’s Policy on Development Co-operation, which was presented to the Althing last year.

No less important is the fact that the Nobel Committee should recognise those who focus on the rights and living conditions of women in developing countries. It is a well known fact that support for women is an extremely effective form of development aid. Women put the interests of their families first, and they perform their tasks conscientiously and with enthusiasm.

Iceland’s development co-operation has placed special stress on women’s affairs. The Icelandic International Development Agency’s equal rights policy emphasises the integration of gender and equal rights perspectives in all the Agency’s development projects.

I spoke earlier this week to the Board of Directors of ICEIDA and the Foreign Affairs Committee concerning the need to review the legislation governing the Agency. The Agency has done remarkable work, and we look with pride at the men and women working on development projects in the field, often under difficult conditions. But the current legislation on ICEIDA is now 25 years old, and during this time profound changes and progress have occurred in the conduct of development work. The aim of the review will be to modernise our development co-operation and to increase the efficiency of our work with the needs and interests of the recipients in mind. I stress the need for careful work in this respect, and consultation with the political parties, NGOs, academics and the business sector.

There has been a general consensus on Iceland’s development co-operation so far, and in my opinion it is extremely important that this should continue to be the case. I think we all agree that Iceland wants to contribute to the international effort and we wish to do our share in the struggle against poverty in developing countries. I am therefore optimistic that a broad consensus will be reached concerning the future arrangement of these affairs when proposals in this regard are submitted for debate in the Althing.

In our multilateral co-operation we also emphasise women's issues. Worth noting first in this context is a more than tenfold increase of our contributions to UNIFEM over the past two years. UNIFEM does important work in the United Nations, but has not had the weight that we believe to be necessary. In the course of our work within the UN we have strongly emphasised the need to address equal rights issues more firmly in the tasks of the United Nations. I am therefore extremely pleased with the proposals to reorganise the work of the Organisation that were presented last week and submitted precisely in this spirit.

I would also like to mention the increased emphasis on the affairs of women in war-torn countries. I recently presented new points of focus in the work of the Icelandic Crisis Response Unit, and in fact the Unit has been co-operating with UNIFEM in the Balkans for years.

It is becoming more and more difficult to distinguish between development matters and reconstruction and peacebuilding work following armed conflict. Afghanistan is a good example – but it is also worth mentioning here that Iceland’s participation in the Sri Lanka Monitoring Mission is a premise for the development work undertaken by Iceland in that country.

Ahead is the NATO Summit, where one of the principal issues will be the means of improving the co-ordination of the work of the Allied peacekeeping forces and international aid organisations in Afghanistan. For this purpose representatives of NATO have held meetings with representatives from the United Nations and the World Bank. It is safe to assume that Afghanistan will prove to be a touchstone for future peacekeeping work in co-operation with development and aid efforts. In this area, Icelanders can share their valuable experience. In my opinion this trend provides opportunities for Iceland and fits well with the changes in focus that I have presented and that are being implemented within the Icelandic Crisis Response Unit. Let us bear in mind that one of the principal problems of war-torn countries is the preservation of stability following the cessation of conflict in order to prevent the resurgence of conflict. In approximately half of the countries where peace has been establish armed conflict breaks out again within five years. If the peace process is not followed by improved living conditions there is a significant risk that conflict will break out again.

Previously, peacekeeping and development were regarded as completely unrelated tasks. The perception was that peacekeeping was a military affair to be undertaken by NATO, UN peacekeeping forces or other similar organisations – while development co-operation was the domain of development agencies, such as the United Nations Development Programme, UNIFEM and the World Bank. The reality now is that all of these parties have in recent years reinforced the aspects of their work relating to post-conflict rebuilding. It is a step in the right direction that those who are involved in peacekeeping and development aid have moved closer together in recent years, giving increased hope that peace agreements will hold, leading to economic and social progress in post-conflict areas.

It is important for the framework of Iceland’s participation in peacekeeping efforts to be clear. For this reason, I intend shortly to submit a legislative bill to the Althing concerning the Icelandic Crisis Response Unit, and it is important that this bill should pass through the Althing during this session. Also, work is in progress on the preparation of a code of ethics for the Crisis Response Unit.

I have dwelled on the importance of development co-operation in promoting peace and security throughout the world. It is no less important, however, to look at the protection of human rights in this context. It is a fact that violations of fundamental human rights are frequently among the roots of conflict and war. The protection of human rights promotes the reinforcement of security and peace in the world. Human rights are one of the cornerstones of Icelandic foreign policy. I intend to take the initiative in sharpening and strengthening Iceland’s participation in international discussions of human rights. To this end, I have decided that work should begin on the formulation of a comprehensive Icelandic policy on international human rights. The principal aim of this policymaking will be to analyse the ways in which Iceland can contribute to the protection and fostering of respect for human rights in the world.I will emphasise consultation with  NGOs and organisations which are concerned with human rights in the preparation of this policy.


Madame Speaker,

The UN’s Security Council is responsible for preserving peace and security in the world. As Halldór Ásgrímsson, former Foreign Minister said in an addess to the Althingi in 2003, Iceland’s candidacy for a seat on the Security Council is a logical continuation of the aspiration to secure Iceland’s fundamental foreign interests through active participation in international co-operation, particularly within the United Nations. This aspiration means that Iceland must shoulder the international responsibilities that are expected of a prosperous and independent state by the international community. Sometimes it is said that a small country like Iceland has no business in the Security Council ­– that the Council should be reserved for the superpowers to discuss and arrange world affairs. I categorically reject all such views. The peace and security of the world is not the private affair of the superpowers – it is such an important issue for Mankind that everyone has a duty to contribute.  Ever since the establishment of the United Nations it has been a basic refrain in the work of the Organisation that the voices of all states –  large and small ­– are important in the discussion of vital international affairs.


Madame Speaker,

Sustainable use of marine resources is one of the cornerstones of Iceland’s foreign policy. In this regard, Iceland has set a good example in its approach to the resources of the sea. Unfortunately, this is not true of everyone. Overfishing and exploitation of fishing grounds around the world may in time have a negative impact on the public attitude to fishing in general. In a recent report published in a well known scientific publication it is implied that all the fish in the sea may disappear within 50 years, if an extensive fishing ban is not imposed immediately. We must support the cautionary words of scientists that care must be taken in handling the diverse and sensitive resources of the sea. Nevertheless, it is important that this should be done in the appropriate forum and we must prevent the public debate from being dictated by generalisations, extremes and emotion.

In recent weeks and months the Foreign Ministry, in consultation with the Fisheries Ministry, has participated in measures to gain control over abusive exploitation of the living resources of the sea in our region. Illegal, unreported and unregulated fishing conducted by vessels flying flags of convenience represents a serious threat to the interests of fisheries states. This threat must be addressed with firm commitment. Icelanders must take the lead in the struggle against pirate fishing. This struggle calls for effective co-operation with other nations on this important interest of all Mankind. It is also important to attack the root of the problem – which is simply the fact that pirate fishing, in spite of everything, pays. Embargos and blacklists can provide important tools to increase the costs of those engaging in these illegal activities. Co-operation with financial institutions and other undertakings providing services to the operators of pirate fishing vessels could also make life more difficult for them. But we must also be prepared to take our own measures. It is possible that we may be facing the prospect of a new cod war to protect the fishing grounds around the country from uncurbed exploitation. It must also be regarded as an option to resort to all available measures – and the trawl wire cutters that served us so well in previous cod wars are not excluded as a possibility.


Madame Speaker,

In recent years, Iceland has succeeded in developing one of the most powerful free-trade networks in the world. The Agreement on the European Economic Area secures our access to the internal market of the European Union – which is not only one of largest common market areas in the world, but also our most important market. The integrated rules on the entire European Economic Area as regards trade and the free access of Icelandic enterprises to the European markets has been one of the most important catalysts for the Icelandic business expansion. Free trade agreements concluded by EFTA with states outside the EU have subsequently extended this network. EFTA has concluded 16 free trade agreements. Today, Iceland’s free trade network extends to countries on four continents with 850 million inhabitants.

Nevertheless, we will continue our efforts to strengthen this network. Recently, negotiations were concluded with Egypt and discussions have now been renewed with Canada with hopes of concluding those negotiations this year. In addition, the EFTA states have been particularly effective in Asia. Negotiations are currently in progress with the Gulf Co-operation Council, and preparations are under way for free trade negotiations with Indonesia. This summer a feasibility study was concluded on the negotiation of a free trade agreement between Iceland and China, and there are hopes that free trade discussions could begin this year. It is, therefore, clear that the course of events in this area is swift – and it is even imaginable that within a mere few years the free trade network to which Iceland belongs will extend to countries with a combined population of over two billion people – one third of all Mankind.

Free trade agreements and other bilateral trade agreements, such as investment agreements and double taxation avoidance agreements, can be crucial for the cross-border expansion of Icelandic business enterprises. Icelandic enterprises are constantly looking for new markets and business opportunities – and their attention must surely be directed at the growth areas of Asia, as well as Eastern Europe and Africa. The Foreign Service must be alert to all emerging opportunities and ensure that Icelandic enterprises can take advantage of the best possible terms of trade as widely as possible.

It is also clear that the importance of bilateral agreements will increase still further in the coming years after negotiations on liberalised international trade within the World Trade Organisation faltered last year. At this time it is impossible to say when the discussions can be resumed, but Iceland must hope that negotiations can be begun anew as soon as possible, as there are few nations in this world that are as dependent on the increased liberalisation of international trade as Iceland.

One of the most difficult topics of discussion in these negotiations is trade in agricultural products. On the part of Iceland, emphasis has been placed on securing for the Icelandic agricultural sector a realistic opportunity for adaptation to changes in its operating environment, in the interests of both consumers and farmers. Among Icelandic farmers there is understanding of the need for changes in their operating environment and for their involvement in the globalisation of trade, and they have prepared for changed times with great vision and skill. It is also important to bear in mind that these trends present numerous opportunities. Until now, tariff barriers in many of our neighbouring countries, particularly in the European Union, have presented difficult obstacles to increasing our exports of agricultural products. It is important for us to try to increase our opportunities to export agricultural products. For this reason, discussions were recently taken up with the European Union concerning increased liberalisation of the trade in agricultural products – and I am optimistic that these discussions will bring benefits for both consumers and farmers.


Madame Speaker,

The European Union now finds itself at a crossroads. On the accession of Rumania and Bulgaria to the European Union at the turn of the year, the number of member states will reach 27 –  which means that 12 new member states have joined in less than three years. The enlargement will have various effects on the outward appearance, infrastructure and focus of the European Union. The member states of the EU are now confronting the question of what direction events should take –  and there are various indications that there is no general consensus on the answer to that question. Developments in the EU have a direct impact on Icelandic interests. As I mentioned earlier, the European Union is among our most important partners in various areas, not only in trade but also foreign affairs, security and law enforcement co-operation – to mention only a few examples. The co-operation between Iceland and the European Union is based on common interests and values, and I am convinced that this co-operation will continue to strengthen in the coming years. I believe that it is the duty of the Foreign Ministry to monitor events in the European Union closely so that when the time comes we will be prepared to take decisions on how our interests can best be preserved in our relations with the European Union.


Madame Speaker,

Recently, we had the satisfying news that an agreement took effect between Iceland and the Faeroe Islands on a joint economic area of the two countries, an agreement frequently referred to as the Hoyvik Agreement. The Faeroe Islands is a small nation, to be sure – but the fact is that the Faeroes are a more important market area for Icelandic business enterprises than many larger markets. The agreement, therefore, represents a significant step in the direction of strengthening relations between Iceland and the Faeroe Islands. I have also decided to take another important step in this regard by opening a general consulate in the Faeroes next year. The establishment of the consulate is an event of considerable significance, as this will be the first mission from a foreign state opened in the Faeroes – and it is certainly appropriate that Icelanders should be the first. The Faeroese have also expressed an interest in joining EFTA, and we will of course support them with all the means at our disposal.

It was a matter of great satisfaction to me that we were able to celebrate the entry into force of the Hoyvik Agreement at the last meeting of the Nordic Council in Copenhagen. It is safe to say that the Hoyvik Agreement, which is based on the mutual trust of neighbouring states, represents Nordic co-operation at its best. A recent survey revealed that Icelanders and Norwegians place greater emphasis on Nordic co-operation than the Nordic countries who are members of the European Union. This should serve as a reminder to us of the importance of strengthening Nordic co-operation and making it into an attractive forum of co-operation for all the Nordic states.


Madame Speaker,

At the same time that we come to grips with new threats and new opportunities, we also face the prospect of shouldering greater responsibility for our own security and defence. The principal pillar of Iceland’s security and defence policy rests, as before, on the Agreement with the United States. However, uur security and defence policy is subject to continuous change and requires constant review. This review calls for a balanced and careful debate on the best means of meeting the country’s security and defence needs. This is a matter of too great importance to be made a subject of mockery or drowned in empty political rhetoric. All the political parties must participate in this policymaking and the academic community must also be engaged. A study is being conducted on the best way to direct this debate so that it will be useful for the government’s policymaking. It would in no doubt be an appropriate option to a Security Affairs Institute in the model of many of our neighbouring countries. An institute of this kind could address security matters in a broad context, for example in the manner that I have done here today.

At the outset of my speech I referred to the various opportunities presented by Iceland’s geographical position. One of the most important tasks in Icelandic foreign affairs in the coming years will be to ensure that we take advantage of these opportunities – and thereby continue to strengthen our nation’s economic prosperity and future security.


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